Seven-year Christmas tree slump subsides

By Mitch Lies

For the Capital Press

Published:November 19, 2013 4:18PM

Photo by Mitch Lies

A helicopter pilot moves Christmas trees from a field to a loading station at Drakes Crossing Nursery in Silverton, Ore., as part of the 2013 Christmas tree harvest. Northwest growers report that orders and prices are up from a year ago.

Growers said prices are up only slightly from a year ago, but after the seven-year slide, even a slight uptick is encouraging. And, growers said, for the first time in a long time, retailers are hungry for high-quality trees.

“The challenge over the last few years has been oversupply,” said John Tillman of Northwest Plantations in Elma, Wash. “We would hear a lot about how they can get the same trees cheaper somewhere else.

“There is a lot less of that this year,” Tillman said.

Problems with oversupply date back to the early-2000s when investors, many of whom were new to the industry, planted millions of trees to take advantage of what was then a strong Christmas tree market.

“People were planting 10 million trees a year in 2001 and 2003,” said Bryan Ostlund, executive director of the Pacific Northwest Christmas Tree Association.

Seven years later, when the noble fir and Douglas-fir trees reached market size, the market was flooded, and prices plummeted. Growers, especially those new to the industry, sold trees at rock bottom prices, growers said.

“They sold the trees for whatever they could get out of them and then went on to another crop of some sort,” Tillman said. “Those of us who make our living at this had to compete with that, and it was tough.”

“We were hanging on by our fingertips,” Grogan said. “It hasn’t been easy.”

“It was bad enough,” said McKenzie “Ken” Cook of McKenzie Farms in Estacada, Ore., “that we lost over half of the growers that had over 100 acres of production in Christmas trees.”

“Six years ago, there were over 110 growers in that category. Today that number is less than 50,” he said.

Oregon leads the nation in Christmas tree production. Washington is the sixth leading producer.

The total number of Christmas trees in the ground in the Northwest has dropped from about 85 million four or five years ago to about 75 million today, Cook said. Growers typically harvest about 10 percent of their trees in any one year.

Prices, meanwhile, dropped 35 percent from their peak in 2004 to their low point last year, growers said. The slight price increase growers are experiencing this year amounts to only about 2 to 3 percent over last year, Cook said, well below what growers need to be sustainable.

“We need more like a 10 to 15 percent increase in prices for growers to have sufficient cash flow to replant their crops and maintain their crops,” Cook said.

But the industry expects prices to continue on their upward movement for at least the next two years, before they could plateau out.

“No doubt prices are still soft,” Ostlund said, “but that will start to change once growers realize that the supply is not what everybody thought it was. That will put them in a very good position in 2014, and we look forward to it.

“We knew the shift in the market was coming and that we were due for an uptick,” Ostlund said, “but until you see it, you can do nothing more than cross your fingers and hope for the best. Now it’s here. It’s for real.”

Ostlund said that buyers that waited to come into the market late this season are having a hard time finding trees, particularly high-quality trees.

“I’m hearing from a lot of growers that not only are they sold out, they are oversold,” Ostlund said. “They are starting to cut into next year’s inventory.

“We haven’t heard comments like that for a long time,” he said.

Tillman said the downturn was tough on many in the industry, especially as it dragged into its sixth and seventh year.

“These last years have been real close to a lot of us not being able to keep doing what we’re doing,” he said.

“The people who have stuck it out, who have made a living at this through thick and thin, at this point, I think we deserve to be rewarded a little bit for our perseverance and our ability to serve customers with the trees that they need, and to get through these times,” Tillman said.

“This has not been easy; we have really had to figure out how to make do with a lot less,” he said.

“I feel like a survivor,” Cook said. “I feel like I have been to war and I am coming home, and it’s a darn good feeling.”